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A Wiser Retirement®
294. What Flying a Plane Teaches Us About Financial Risk
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In this episode of the A Wiser Retirement® Podcast, we cover how principles from aviation, like threat and error management, proactive and reactive planning, and strong team communication, can be applied to personal financial planning. Casey Smith is joined by airline Captain Evan Bogan to explore how pilots handle unexpected challenges and how families can do the same with their finances. From building a rainy day fund to managing opportunity money and avoiding unnecessary fees, they offer valuable insights for anyone looking to strengthen their financial flight plan.
Related Podcast Episodes:
- Ep 253: Navigating the Future of the Airline Industry
- Ep 264: Shaping the Future of Aviation: Key Leadership Skills for Pilots
- Ep 194: Delta, American & United: Who's Got the Best Pilot Retirement Offering?
Related YouTube Videos:
- New Delta Airlines Nonqualified Deferred Compensation (NQDC) Plan for Pilots
- Pilots: Roth or No Roth... That's the Question
- Why Financial Planning is Different for Pilots
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Having a Plan B Ready
Speaker 1The idea of having a plan B is making sure that the crew or, in the financial world, I guess the family is on the same page as how they're going to handle an unexpected threat. And in having that rainy day fund ready to go conservatively invested so the stock market doesn't take too much of a chunk out of it when things drop. And in making sure that you have what we call in the aviation world a shared mental model right. How are we going to handle this if something doesn't go the way we expect it to? What are you going to do? What am I going to do? And make sure that you know what I'm going to do and I know what you're going to do.
Speaker 3Welcome to the Wise Retirement Podcast. Are you curious about what flying a plane teaches us about financial risk? I'm Casey Smith. Today I'm joined with airline captain Evan Bogan. Each week, we bring you practical advice on retirement, investing and planning for your financial future. Don't forget to subscribe to the podcast wherever you're listening. Let's get started, hey Evan.
Speaker 1Hey Casey, how are you doing? Thanks for having me back.
Speaker 3You know we should have like three gold stars, because this is your third time doing a podcast with me and I appreciate that You're also a great friend and helping me with my own plane.
Speaker 1I'm glad to help.
Speaker 3This time.
Speaker 1I brought my own idea with us to the podcast.
Speaker 3That's right. Evan does a good job of making sure that I'm a safe pilot and help me really get back into general aviation after a break for about well break from aviation for 10 years I hadn't touched general aviation, since like early 2000s.
Speaker 1SSL-182 moves a little differently than a jet Right, but the concepts of safety and that's what we're going to hit on today a little bit- and the planning and the risk management are similar, so being safe in your airplane is very similar to the concepts that we talk about being safe in a larger airplane.
Speaker 3So, before we get started, have you been following any of this? The Indian air?
Speaker 1crash the 787? Yes, I sure have. I think most of us in the industry have. It's a tough one. It's a tough one for sure it's a tough one.
Speaker 3It's a tough one for sure. So I think most of the listeners probably following this thing, but we had that Boeing 787 crash in India and the latest news is just below the thrust levers power levers there's two run and off switches and it's basically for fuel control to the engines and both were turned off and one. It's weird how they don't know which one said it, like you think they'd know which which pilot said it?
Speaker 1I think they. They probably do. They just didn't say, they didn't want to say their initial report, right, yeah, so they.
Speaker 3One of them said to the other why are the switches off? And the other one says I did not do that, right, uh, and, and the english was a little bit different, but that's that's how it came out and then, uh, one switch was turned back on and that engine couldn't spool up fast enough to regain altitude, right, and then the other one was turned back on, like 10 seconds later or something like that. So it happened right after takeoff, the two switches got, got got flipped. I I've been searching, I just can't find anything that would, um, that would make the switches go off by themselves, because you have to pull it up over a gate, correct?
Speaker 1yeah, it's the same, nowhere near gear switch.
Speaker 3It's nowhere near anything else, but that right right it.
Speaker 1It's going to be interesting to see what they come up with um, so I, I don't, I don't know what.
Speaker 3what are your thoughts? Like, what are people talking about in your, in your circles?
Speaker 1There's. There's basically two ways this could go, and it's intentional or non-intentional, and I'm not going to.
Speaker 1I'm not going to make a statement regardless of you know how that's going to turn out, but they will do a thorough investigation, lessons will be learned. Hopefully, changes will be made for a future that will make aviation safe, safer and that's what all of these unfortunate, tragic events do is. In the long run, the takeaways are the industry becomes safer from each andADEC, which is the power settings, are somewhat automatic and there were there were some 80s out on that.
Speaker 3that was optional for an airline to make changes.
Speaker 1Right, yeah, I did see that, but.
Speaker 3I don't understand. Fadec can do whatever it wants to do, but I don't understand how it would make those type of switches ever go off to do, but I don't understand how it would make those type of switches ever go off.
Speaker 4There's no way for the switches mechanically to have been moved by a computer by a glitch exactly now what goes on behind the switches?
Speaker 1that might be a different story. They might look into that.
Speaker 3Yeah, yeah, yeah, very true, electronic controls they are electronic switches we've been a little surprised by boeing over the last, uh, five, six years. I'll'll leave that there. Yeah, yeah. There's some Boeing programming surprises that no one knew about except for Boeing. That caused some issues. This airplane has been operating safely for many years many tens of hundreds of thousands of hours.
Speaker 1So yeah, we don't want to jump to conclusions.
Speaker 3No, no, but I'll say it. It looks really intentional at this point, which which I would say is really good news for Boeing stock and people who fly fit to fly mentally.
Speaker 1Who's?
Speaker 3fit to fly. We just we haven't had that happen.
Speaker 4Knock on wood.
Speaker 3yet in the U? S we had a German wings airplane where a guy decided that his life was over and he's taking everybody else with him Right. That airplane, that airline, got folded into somebody else after that incident.
Speaker 1We did have that jump seater. Oh, that's right, the guy on mushrooms, yeah.
Speaker 4The guy on mushrooms that jump seater on that horizon the guy on mushrooms.
Speaker 3Yeah, the guy on mushrooms, he needed some help as well, but we had two good pilots flying that were, you know, beating the crap out of him kicking him out of the cockpit yeah, so so yes, but yes, true, but what if he'd been a pilot?
Speaker 1right. And if you go farther back, we had fedex, if you recall, maybe 25 years ago.
Speaker 3Yeah, duty guy, another off-duty guy, that was nuts, but the guys flying were okay and were able to get the airplane on the ground? Yeah, yeah so, yeah, mental, mental, um, mental health and and aviation, that's something that uh, I think the fa has gotten probably better at, but there's probably a whole nother level to go and probably us knowing people probably have to start. People have to start speaking up. Yeah, you know, and it has been, that's a whole nother level to go and probably us knowing people probably have to start.
Speaker 1People have to start speaking up yeah, you know, and it has been.
Speaker 4That's a whole other topic yeah, an hour talking about that as well, but it has been in the forefront.
Speaker 1Uh alp has been promoting, you know, mental health, uh awareness, and so has the faa making some changes with regards to pilots ability to get help for that yeah, type of time it used to be, we were just focused on the alcohol.
Speaker 3Now I hear less about the alcohol and I hear more, more about this, this type of stuff. But.
Speaker 1But yeah, it's interesting to get your take on on that being being being an insider Right, and I do work in safety at my company as well, and I have for about 10 years now, and that's the genesis of this idea for this discussion today is risk management and what we call threat and error management in aviation, and I thought you know what this has a lot of relevance to financial planning as well and the things we've talked about over the last few years.
Speaker 3So do you think about risk management? As a pilot, when I flew for 12 years in commercial aviation, you think about a lot of different things. It's not so much mechanical thinking. You trust the airplane is going to be working properly, right, but it's. But it's more of a lot of weather planning, fuel planning all those things, right.
Speaker 1Right, we talk about two different types of skill. We talk about skill-based issues and we talk about you know, we call it the head game, the mental issues, right? So the threat and error management is more in the head rather than the actual stick and rudder skills of flying the airplane. It's the planning and the decision-making. We'll talk a little bit about the five core skills that we teach pilots to use, to to handle situations, and it's all in the head.
Threat and Error Management Concepts
Speaker 3Yeah, so let's talk about being proactive.
Speaker 1Right. So we break down the the threat and error management concept into two different buckets. We talk about being proactive and we talk about being reactive, and every company, every airline, would have a specific unexpected threats, and other companies might use different terms, but at the end of the day, it's a concept of having a plan to be proactive about threats that we know, threats that we can expect and we can plan for, and then having a plan to be appropriately reactive to threats, to the operation that might not be on our radar, but we want to have an idea of how we're going to handle those when they arise, so that they don't magnify. So give me an example of proactively.
Speaker 1Proactive would be having a plan for things that you're aware of that are going to be difficult. So in the aviation world we can talk about complex airspace.
Speaker 1If I'm flying to Chicago, o'hare, versus if I'm flying to Greenville, spartanburg, I'm going to put a lot more planning and effort into making sure that I'm aware of how the arrival is going to run, how the taxi plan is going to be, how the operation is going to go there in Chicago. Some other expected threats might be. I'm flying with someone who's new. My first officer is brand new, off of training, so I'm going to have to spend a little bit more time making sure that the first officer is, you know, on the same page as I am with regards to how we're going to operate the airplane. Expected weather I know the weather is not great in a certain situation or a certain destination that we're going to, so I'm going to spend some time making sure that I have the options, making sure I have the right fuel, making sure I have the alternates things like that.
Speaker 3So those would all be examples of expected threats or being proactive for that. Yeah, and so in financial planning we would be thinking more lines of okay know, that I'm going to die someday.
Speaker 1Unfortunately, yes, what if I died?
Speaker 3unexpectedly, or I know that I'm aging. So what if I end up in a assisted living slash nursing home versus living in my home the rest of my life?
Speaker 1Sure, what if I? On a more optimistic topic, things like college kids going to get up and go to college. So we want to have a plan for that, being proactive for that Right.
Speaker 3Also, if I was disabled through work, you know what would happen with that. So it's kind of like disability is somewhat like well, what if weather came into my destination? And I couldn't get there. Where's my alternate? Where am I going to land this airplane Right and and have enough, plenty enough fuel that I'll get myself in trouble? Your?
Speaker 1financial examples are all dark.
Speaker 3Let's go with some more positive ones here. So we know people are going to get married.
Speaker 1Sure, your younger clients are going to want to buy a house, and so I think we use the word expected threat. Those are not necessarily threats, but they're things that we want to be proactively planning for in the financial world. True.
Speaker 3So I guess my dark examples I was going with life insurance long-term care and disability insurance.
Speaker 3Right, these are all things that you know could happen.
Speaker 3It's things that you think about, happen to everyday people, but these are things that you need to understand how they relate to you. Unfortunately, that world is full of salespeople that want to sell you too much of it, and so you know working with a firm like ours is an independent way of looking at it. Like long-term care, it costs $12,000 a month being memory care, but if you have a good pension, you have good social security and you have a large investment portfolio, you might only want to insure $2,000 of that or $4,000 of that $12,000, because you have enough resources to cover the rest of you. Or if your spouse has already passed away, then you could always sell the house and use those proceeds to help you. So you'd maybe not need life insurance at all or a long-term care at all. Same way with with life insurance, like we don't need a whole life policy, but you definitely probably need a term policy. That's a lot cheaper. Maybe you need additional policy outside of work in case you're not at work or not working at the time something happens.
Speaker 3But you know you're going to grow your wealth over time, and so that term can drop off at some point and you don't need life insurance. You're self-insured, Sure, and these are all things that we can be proactively thinking about. College savings again more of the positive side of creating a reserve for college or having a college plan?
Speaker 3You don't. Maybe I have a lot of clients that aren't saving for college or having a college plan. You don't. Maybe I have a lot of clients that aren't saving for college, but they have a college plan. It's like, well, it's going to be Zelle, or they're going to have, they're going to have to work their way through school, or or college isn't for my kid. I want them to find a um, uh, a vocation that they can go and learn, uh get a certificate and trade and go do that that.
Speaker 3I had paid $750. So my shower had to get replaced recently, like the pipes, and all that stuff had to get done too. It wasn't just like a shower and I could do that, but those people are making good money right, there's nothing nothing, nothing wrong with that especially if you own the company but you might want that college degree to learn how to manage all that, but that's a different story. So just being, you know, be thinking about the future and what can you do to mitigate the costs or surprises of different events?
Speaker 1Very similar in aviation? Yeah, absolutely. I think in the financial world that you can just generalize it as saying the rainy day fund. We we've heard that term before, right.
Speaker 4Right.
Speaker 1So have, have the savings. You know be a saver. So then, when something happens and you know how you want to invest, that savings is something that an expert like yourself can, can advise.
Speaker 3I kind of I forgot about the estate planning one too. Sure, having your will and trust or trust power of attorney, medical directives, all those things set up so if something happens to you and you're living, then your power of attorney can kick in. If you've passed away, then you've already handled your estate properly, so many different angles, and if you've passed away, then you've already handled your estate properly.
Speaker 1Yeah, so many different angles. I think one of the hardest concepts for me to accept was when I first started working with you, that my rainy day fund doesn't make me any money.
Speaker 3My rainy day fund is there. It should be making about 4%.
Proactive Financial Planning Strategies
Speaker 1It's not making me a lot Right. You know it's there and I see the number and it doesn't get bigger, but I know that number is going to be there if I need it.
Proactive Financial Planning Strategies
Speaker 3Right, you know some what we I guess I refer to as play money, which we can afford to take a little more risk with, you know, hopefully make a few more percentage points. I'm working on a project now which I have not disclosed publicly, so I'll just say project. But but one of the things I wrote about was the what is the rate of return of a rainy day fund? Truly, and I use an example of a client who's a ceo of a company um, he got his job got cut during covid. They didn't like the direction he was going, whatever, whatever reason, so went from a high paying job to no job. Well, ceos don't get jobs like tomorrow you go get you apply, you know why are you vr ceo?
Speaker 3it was like a one and a half year almost two year process for him but his he burnt through a good chunk of his uh reserve. But when he got the job you wanted, it paid more than the old job, had better incentives, but it took him almost two years to get it. So I calculated assuming he stayed there for five years his rate of return was like one thousand fifteen hundred percent, right, where, if he had nothing, he would have to take a you know a lesser of a job somewhere else, probably making good money. He's a very talented person, but it wouldn't have been the same as this job, right, right? So so you're looking for 1500% rate of returns. Hopefully you never have to be in that position. But yeah, that's. That's an example of how you how you should be thinking about your reserve.
Speaker 1And I think that's a really good segue to the second component of the threat and error management concept, which is having a plan to be reactive to an unexpected threat. And in an airplane, an unexpected threat could be a mechanical failure. It could be a last minute change in the weather that we haven't planned for. You don't have enough fuel for an alternate and all of a sudden a thunderstorm shows up over Atlanta which happened about a week and a half ago and caused a big mess unfortunately Right.
Speaker 1And then you know 95 airplanes divert to savannah and greenville, spartanburg. And then you're on the ramp and you have an international airplane and you have no customs to clear you. And right, you're stuck on the airplane for hours and these things happen and we can't plan for all of them, but we have to make sure glad you bought that first class seat, that's right.
Speaker 3That's right, otherwise the back gets really tight. Yeah, yeah.
Reactive Planning for Unexpected Events
Speaker 1Become claustrophobic For sure. Yeah, I know that was. That was a rough day for a lot of folks, employees and passengers alike. Yeah, yeah, absolutely. A plan B is making sure that the crew or, in the financial world, I guess the family is on the same page as how they're going to handle an unexpected threat. And in having that rainy day fund ready to go conservatively invested so the stock market doesn't take too much of a chunk out of it when things drop. And in making sure that you have what we call in the aviation world, a shared mental model. How are we going to handle this If something doesn't go the way we expect it to. What are you going to do? What am I going to do? And make sure that you know what I'm going to do and I know what you're going to do.
Speaker 3Right, you know aviation is uh, people get on the plane, it's just routine. Now I don't think they understand, and a lot of flights are routine but I don't think the vast majority of them are. Thankfully. I don't think they understand what it what it takes to do this, to do aviation no-transcript got good friends at all those companies and I would absolutely not second guess getting on the airplane for one moment.
Speaker 3The product behind the door might seem a little different, but, but, but, but, you're, you're, the safety record is is still there. But I remember, uh, I, I was headed to, uh, I believe, where was it? Um, uh, uh, newport, newport news, and um, and we were just trucking along. It's no big deal, it was like the last leg of a four-day trip and I checked the weather I'm sorry, it was Norfolk. I was checking the weather in Norfolk and I was like, oh my gosh, there's a thunderstorm on top of the field and it doesn't appear to be moving anytime soon. Now, it was forecasted to be there, potentially, and I was like, huh, this thing's not moving. It forecasted to be there, uh, potentially, that's like huh this thing's not moving, it's still there.
Speaker 3And so, man, we have to go to alternate. And so I think about all the things I was gonna do when I got home, and that's gonna be really late, you know. And then I look at the alternate airport there's a storm storm on top of that airport, too unexpected. And I was like, oh my gosh, like this is uh all right, uh thing's not moving. And then I started figuring out, well, where else could we go? And I started doing the math and like, the next place was Washington, dallas. And then I started looking at the fuel and I go in.
Speaker 3I don't know if I got enough fuel to get to Washington Dallas, and so I immediately slow their plane down to, like you know, the best economical speed. And then we also climbed because we're fairly low and I was like we need to get higher. So we climbed a little higher. You burn. You burn a little less fuel up there, right. Well, long story very short. We we were able to talk because there's a lot of restricted airspace in around DC, right, so we couldn't fly over over everything, but we were able to pretty much do a power off descent all the way down into a final. At dallas we land. I still have an hour with the fuel left which I'd originally I honestly I'd calculated zero. Yeah, earlier I was like great, I created an hour with the fuel by by rerouting, getting reroutes, getting more direct, and we land in a the all the passengers just like really pissed off that they were in Washington DC.
Speaker 3And the whole time I was like, but you were so close to landing in a beach somewhere, right, right. So the point is you yes, you, you have to improvise sometimes what you do, and we have to do in personal finance at times, but also just, just just always, always, be respectful for this. There's people up front that are that have your lives in their hand and they're trying to make the best decision we do.
Five Core Skills for Decision-Making
Speaker 2Before we continue, do you want to make the most of your airline's 401k plan? We've created free 401k allocation guides for most major airlines to help you do just that. Download yours for free at pilotretirementcom.
Speaker 1Now back to the episode so I think, um, I think one of the hardest things for people to do when they come up with these strategies, or try to come up with these strategies, just to try to figure out how, how to develop them yeah, so in in the aviation world, when we teach crews to create strategies, both proactively and reactively, we use what we call the five core skills, the five core crew resource management skills, and these are concepts that allow crews to create effective mitigation strategies, both proactively and reactively. And you just hit one of them there, the decision-making skill, right? Well, I think probably we'll hit that one in a couple minutes, because that's a little bit later down the list. The first one is planning, right. So planning is a big part of being safe, both proactively and reactively in aviation and in finance, right?
Speaker 3Yeah, I think it's. You know, if you have a lot of debt, if you have, if you're living on a hundred percent of your income, you have the inability to react. Sure Right, You're trapped. You're trapped in kind of that situation and bad things can kind of spiral and get worse. Um, when you're living below your beans, you have a good emergency reserve established, you have options, and with option I mean maybe you're on a great path going forward, but then the path is not as good, or the path takes a little jog to the left or to the right but you still end up at your destination, right Right.
Speaker 1I think we talked about that on my first visit with you. We talked about the parallels between flight planning and financial planning. Right Exactly, I think you'll probably refer to that episode here before we close.
Speaker 3So I think being reactive in a financial standpoint to two surprises, it's just having the ability to be able to do that.
Speaker 1You know, even in your own life. Recently you've had to be reactive reactive Right, yeah, and I don't mind sharing that example of an unexpected threat we had in our family unexpected financial requirement for a medical issue with one of my children and insurance declined to cover that particular medical process that he needed you know that's a whole other topic right there.
Speaker 3We're not talking about $5,000 either, no right.
Speaker 4Right.
Speaker 1So you know, we have the ability to step back and kind of smile about it now. But once we got over the sticker shock of the expense that we were looking at, we expanded our team and the first thing my wife said to me was okay, call Casey. And we did, and we sat in our car and we had a good conversation with you and the first thing you said was you're going to be fine, right, because you're familiar with our financial situation and you knew that we had the ability to weather the storm, so to speak. Right, and so um expanding the team, um getting expert opinions on any situation in aviation or in finance is extremely important. There's no way for us all to be experts in everything. We would like to be right, even though many pilots like to think we are Right.
Speaker 3You want a confident pilot, but sometimes it works against us, doesn't it? Occasionally it does.
Speaker 1Occasionally, and that's a joke. And I think all of our spouses would smile at that one as well. You know, as their airline pilot husbands climb tall ladders to fix things that they're not qualified to fix. But you know we we had that plan in place for unexpected threats. We had that relationship with you. We'd been working with you for several years, so you were able to tell us very quickly that we could weather that, that storm, and that was very, very much of a relief to us. Yeah, it's.
Speaker 3It's you're able to do that because because you'd gone through the financial planning process. It's really important for so many families and maybe they have it just fine. But there there's gaps that can be filled in. And and that's where we always like to tell people that we're a financial planning firm that happens to do asset management because financial planning is so important, and I think only about 4% of wealth management firms actually do real financial planning. Everyone else is more of time value money calculations based on how supported, and I think only about 4% of wealth management firms actually do real financial planning. Everyone else is more of time value money calculations based on how much money you have invested with them. And yeah, your retirement will be fine, but you know, what you went through had nothing to do with your retirement, right, right.
Speaker 3Whatsoever you've been any any other advisor would have been very ill equipped if they didn't have a full picture of what was happening overall.
Speaker 1Right, absolutely, communication is the next step or the next core skill, and that's huge, obviously, in the flight deck, making sure that the pilots are talking to each other, making sure that we're on the same page, we have the ability to effectively communicate. But I think that that's huge in in personal finance as well, especially within, within the family dynamic right man.
Speaker 3You know what we do I joke with our new hires here is I say you know you have a finance degree or you have a personal financial planning degree, but you should have done all your electives in psychology, because so much of what we do is is is helping families, sometimes heal, and you might have a really dominant personality. Another person is just kind of yeah, okay, go along for the ride, but when you make these big decisions, you don't need to make them by yourself. When you're, when you're uh, um, when you're a pilot, you shouldn't be making it, because you're the captain. You need to take in input from, from everyone else and sometimes you have blinders on to the situation. Um, I, you know we were coming into Atlanta one time as a quick flight from Chattanooga.
Speaker 3And every time the airplane coupled with the approach, uh, it would start porpoising up and down. So it only happened at like 2,500 feet. So we'd get, we'd be descending down to Hartsfield, and then it ran at 2,500 feet, it would pitch up, it would pitch down, it would pitch up, it would pitch down. I'm like what the heck is going on with this thing. You can't do a visual approach, right. And so we asked to be broken out and they'd circle back around. We would do it, we did it twice, and now they're getting angry with us because Atlanta is not really built for that, right, right, I was like I'm sorry, your glide slopes, your glide slope is, uh, is something's not right, you know.
Speaker 3And then the people in front of us, uh, traffic in front of us was getting through just fine. So I was like, well, it must be something with how our planes receiving that signal, for whatever reason, uh and I. I was like, for whatever reason, uh and I. I was like I was out of options, like, well, uh, you know, I could just kind of take the hand, fly it, take the average as I descend down to the ground. I'm like that doesn't seem logical, because I don't trust what I'm seeing and then I so in my head I'm like we're just gonna go back to chattanooga at this point. And finally the first officer says well, we could just shoot the. We could, just, we could, could shoot the.
Speaker 3GPS approach Right I'm like oh right, we have other approaches in Atlanta, other than just the ILS. You know it takes someone like that in your life to go. Hey, we have these other approaches here, and sometimes that's your spouse, and sometimes that's a family member who's really close to you in the situation. And that's what I love about these, these family meetings, when you sit down with the family and you allow everyone to have input. And the most person, the person I want to hear from the most, is usually the very quiet wife, right, right, the very quiet wife very often has all the answers, uh, but it's not being listened to, and so you need to make sure that you're having, you allow input and you allow people to speak.
Speaker 3And every now and then it's a quiet husband, but, but most of the most part, it's the quiet wife who's done all the analyzing, the thinking and she says well, I think this is what I this is what I think use quite often when we see a crew that gets so fixated on completing the mission as they planned it.
Speaker 1They are not open to the changes that might have to be made due to outside influences.
Speaker 3Yeah.
Speaker 1And so I intended to complete this flight as planned. We're going to make it, and so sometimes it takes the other person to snap the, let's say, the pilot flying the airplane out of that fixation and say listen, we need to something's different here. We need to make a change in our plan, and that's very relevant, I think there's.
Speaker 3There's been two crashes recently in general aviation with people with perfectly good airplanes where the door came open.
Speaker 4Oh, very frustrating.
Speaker 3There is no reason why those people should not be alive. Right, whole family's gone and and it's because they got so distracted by a silly door. Right, it's loud, it's obnoxious, people passengers freak out because they're oh my god, I could fall out. You're not falling out, the wind is keeping that door pretty much closed, it's just you hear the air coming through the crack.
Speaker 3You know, Right and, and both times the pilots managed to stall the airplane and and there's so much in life that the same thing happens where the door is just a little cracked, we can solve this, but if you don't get, if you don't talk to a third party who really understands how to solve problems, you, you financially come spiraling down because you didn't right, you didn't react properly.
Speaker 3Yeah, I see that with low income families and they just liquidate the 401k plan. They played 41% in tax. They did. They didn't, you know, in one case recently didn't even file disability, like if you're disabled, why would you file disability? Your company paid for disability. Instead, you emptied out your 401k plan. Right, yeah, you know just doing silly things like that, you know.
Speaker 1Right. You don't have to do it all yourself, right. Within a family, you can share the workload. You can share the workload with your financial advisor. You know the other members of your team, so to speak. There doesn't have to be one person making all the decisions and doing all the work. Right, and that very rarely works out well in an aviation environment or in a financial environment.
Speaker 1Yep, there's technology and people to help you yeah absolutely Absolutely, and then, at the end of the day, someone has to just make a decision. You have to expand your team, you have to get all the best resources you can to tell you what their thoughts are.
Speaker 1But, at at at some point. You just need to make a decision right, and and you can't beat yourself up over that decision if it turns out to be the wrong one, because we're not all perfect as much as we try, and occasionally we're going to make a decision that we regret and we have to move on from it, both financially and, you know, less frequently in the airplane, I think most of us uh, by the time we get to the point uh where we're flying airplanes for professionally, we're pretty confident in our decision-making abilities. But even the best make mistakes, right.
Speaker 3Right.
Speaker 1And we all learn from them learn from them.
Speaker 3You know another example I've been giving kind of. You know these worst case examples. But on the more positive side, especially in aviation, um pilots are making more money than they have historically, even adjusted for inflation Right Um times are pretty good and you have the ability to do if you're maintaining your lifestyle, which many pilots do You're having the ability to make life-changing decisions or life-changing events for children down the road. And what happens is you might be making a lot of money Don't feel like you need a financial advisor but you could be doing some things differently with your resources to really help the next generation or even put yourself into retirement in a much different trajectory than you would have without it Sure.
Speaker 3It's not always portfolio management, but it has a lot to do.
Speaker 4that it's like what do I do with my?
Speaker 3extra dollar. Where's my extra dollar go? And there's a lot of things. We call it the opportunity fund, but the opportunity money is. There's a lot of opportunity, which is why we call it the opportunity bucket. But putting dollars into your opportunity money to grow that for the future, that's not inside you paid. You already pay tax on it. It's managed tax efficiently. It's not inside your 401k plan. It could be anything.
Speaker 3My rule is it needs to build legacy, so that could justify the boat. But we're taking kids or grandkids out in the boat and we're going to build memories on it. Sure, Real estate's always usually a good investment, right? So a second or third property it could be. Maybe at retirement you pull it all out and there's around the world trip, Although most pilots don't want to travel anymore after.
Speaker 1I've spent half my life at Hartsfield and I think I'll be more than done with that when I retire?
Speaker 3Yes, exactly so. But maybe there's something you've always wanted to do and and and that, and you're take the whole family with you, or whatever. Whatever it is, is that opportunity bucket that that people are could be missing out on because they didn't plan even in the best of times?
Speaker 3And the opportunity bucket also could be an extended emergency reserve if something tragic happened, but that's probably not going to happen. So reality is that that's what's so good about the planning process is you're able to find these areas where people can improve, these areas where people can improve, which is why even the people in the best of situations, have gone through our planning process and still felt like it was a hundred percent worth the time that it took to do it Absolutely Right.
Speaker 1Once you've expanded your team, done your research, communicated, planned, made your decision, need to monitor the outcome of that decision Right, and some people are more interested in monitoring it themselves. You know you offer the hourly checkups once a year or whatnot, or whatever you call it there, or you can just pass that monitoring responsibility right on and have an actively managed portfolio, right.
Pilot Career and Retirement Planning
Speaker 3Yeah, and I'll segregate it out. So, opportunity money yes, we have a couple of platforms that pilots could benefit from. If you work until age 65, you spend over $3 million in fees. I can't justify that. That is a lot of money and, honestly, unions the companies have done a great job of getting really good 401k plans. You don't need to be using brokerage links and all that stuff. Focus on the core index funds inside those plans and you'll be just fine. In fact, on our website you can go to wiserinvestorcom. On the pilot section. We have free allocations. And.
Speaker 1I just updated my allocations last week from you.
Speaker 3So we literally give for free whatever else is charging money for Right Even firms like there's Allworth, which has a group that focuses on pilots Indirectly through another one of our pilot friends.
Speaker 3He lives near a guy who works for that company and they try to pick apart my models and saying their models are better because of this, what they're going to charge you one and a half percent for, and when I was able to actually level the playing field and show him apples to apples, our models do just fine, somewhat similar to what they're doing maybe slightly better in certain situations, right, level the playing field and show him apples to apples.
Speaker 3Our models do just fine, um, you know, somewhat similar to what they're doing, maybe slightly better in certain situations, right? But the bottom line is we can save you $3 million, and and which one's better is? Is you're literally splitting hairs. Um, so it's, it's. Uh, we, we started the flat fee planning program for the pilots. Other people use it as well, but that's why it's there. You pay a one-time fee, you go through the process and then and if you have money that's outside the Delta plan that we can't get into it, then, yes, we have two options for asset management, but most, most pilots are on the flat fee until you retire.
Speaker 3Once you retire, I can justify a management fee. I can show you our cash management system and how that's set up and how we manage it and why that fee's worth it. But when you're built in the building wealth stage, it doesn't make a whole lot of sense. We do have pilots who have inherited assets. We have quite a few of those, because that's where we are in our age right now. Right, we have parents that are, that are leaving us permanently, and and we have assets that need to be handled. We do. We do a lot of that Because, again, we can justify our fees for that. Right, but I do not want to take someone's 401k plan and charge you a management fee. In fact, the companies that do it, that's the only way they can make money. They're not set up as fiduciaries. They're not set up the same way we are as fee only. So therefore they can only move your money to the brokerage link and then stick you with that fee, right, yeah, and we all know pilots don't want to pay any extra fees right.
Speaker 4Where's my discount? Where's my discount?
Speaker 3Exactly. We even have a pilot discount. I get a chuckle every time I talk to someone about our process. I said I said this is our normal price, but because pilots love discounts, we discounted it by this amount.
Speaker 4Everybody chuckles about that.
Speaker 3Of course, the younger generation doesn't care as much about discounts, though they didn't have to go through what you and I went through Right.
Speaker 1The $10 an hour job out of college? Yeah, right.
Speaker 3And when you're talking to a 25 year old who's who's now like a captain at Delta, you're, you're, just, you're, just like this is nuts Like. When I was 25, I got paid $18.75 an hour to fly beach 1900 in the Northeast and I lost money every time I went to work, of course Different times. There was no per diem because we didn't overnight, it was day trips, you know it was bad.
Speaker 1This is where we start shouting at the clouds like Grandpa Simpson.
Speaker 3But we were happy to do it. Yeah, because we love aviation, we were happy to do it. That's the question I get. A lot is how come you're still, how come you didn't go to Delta or how come you didn't go to a major and I was like because I flew in the worst possible time you could be flying. We experienced September 11th, the financial crisis. That was a really bad, a really bad decade I was. I was happy I was at Atlantic Southeast Airlines, which I hit that at their peak Right.
Speaker 3Because they were adding regional jets like crazy. So I was moved right up the seniority list at the perfect time, but I didn't hit the transition to the major at the perfect time. There were a lot of people still on furlough when I was at NSA Right, it's all about timing. It's all about timing in your birth date I will say if you have younger people that are listening and they want to get into aviation, I always tell them go to the opposite regional carrier of where you want to be that's.
Speaker 3That's been a good bet recently right, if you want the majors are not willing to uh, decimate their regionals to bring bring folks up you want to be at delta, you live in a delta, then you need to go fly for envoy or yeah, and then Delta hires you cause you're, they're picking you off the competition, right, some guys were doing they did, unfortunately didn't upgrade fast enough, but there's guys over at spirit that that were furloughed.
Speaker 3I think they're going to be in a hard spot, cause all I have is FO time. But right, uh, but there were times, if you're still an active pilot spirit, you can get into delta. Uh, when delta starts hiring again, because they love to pick from their, from their competition, right, yeah so yeah but if you want to be an american you wouldn't go to envoy. Maybe you go to endeavor which is delta's uh feeder or republic, and then you get over yeah, get over that way.
Speaker 1Yeah, right now everything's kind of slowed down a little bit, but for for for. You know, in the next year or two I think it'll pick up again, I think.
Speaker 3American's still hiring right now. Delta's stopped for a little bit, right? I think so. I'm not sure about United. I haven't followed them as much as far as our hiring practices, but Right.
Speaker 1There, there, there will be another, another pickup in the age 65 retirements here in the next few years, unless something changes in Washington. As far as the retirement age which I'm, I'm hearing rumors of again, but that's a whole other story here.
Speaker 3Yeah, you know we could kind of end on that note, but I think 67 would be really good for guys who didn't save enough.
Speaker 1Right, or you know, all those folks that are in that age bracket now went through the bankrupt season.
Speaker 3That's what I'm saying. And mergers early 2000.
Speaker 1So it'll give them a couple more years to make up for what they lost for sure, but you also have to keep your medical.
Speaker 3So I wouldn't know if I would as a planner. And am I going banking you making the 67?
Speaker 1Yeah, I think, I think most, most pilots of this generation are a little bit more aware of the more health conscious stay healthy, right then, yeah, smoking drinking whiskey pilots of the 70s and the 80s the tiger express guys from, uh, from a long time ago.
Speaker 3Yeah um, yeah I guess I mean the longevity of a pilot isn't that long.
Speaker 1It's a lot shorter than than other people I have heard that I don't have the numbers to to support it. Yeah, it's an old study.
Speaker 3There's an alpha study.
Speaker 1It's old now, especially the long haul, because I know that that's hard on the body.
Speaker 3Yeah, the long haul people for sure. Uh, that's probably one of those common questions I get in plannings. They come in say, hey, should I go to the wide body the last couple years? I'm like why, why would you? Why would you subject your body to that? And if it looks as an ego thing and you're like just want to say I flew the 330, but I have no need for that.
Speaker 1I'm happy on my 737.
Speaker 3Right Well that's a very passionate debate too.
Speaker 4737 versus the 320.
Speaker 3I went down to see a client down in Florida and I came home on the first flight. It's like 6 am in the morning, coming back to work and I took a picture and I had a great shot of the engine and the wing and then the beautiful sunrise and you know I mean negative comments. I got Ew. You had to ride on a 737.
Speaker 1It's okay, I get it from my son as well. He visited the cockpit on an on an Airbus recently to see the pilots and he saw how big it was in the tray table.
Speaker 4Yeah, he goes, dad us, recently to see the pilots and he saw how big it was in the tray table and the side stick and he goes dad, I hate to.
Speaker 1I hate to break it to you, but I think I want to fly an Airbus, and he's a teenager, so you know, okay, he likes to disagree with dad on everything.
Speaker 3Right, exactly, that's funny. Well, thanks for listening to today's episode. Uh, we've got a few more uh pilot related episodes out there 253, navigating the Future of the Airline Industry that was a great episode. Episode 264, shaping the Future of Aviation Key Leadership Skills for Pilots. And then, a long time ago, episode 194, I did Delta American United. Who's got the best pilot retirement offering? We've got a few more videos out now on the YouTube channel. Which is a wiser retirement? Uh, new Delta airlines non-qualified deferred comp plan for pilots. Um, I don't know how I feel about that. You can listen to my opinion there on that video.
Speaker 3Pilots um, roth or no Roth. We have a big push to everyone's going to put money into Roth IRA. No one's going to save pre-tax anymore, but yet they're making pretty good money. That creates an issue. We got a few competitors out there that once you put everything into a Roth and pay all your tax right now, which is a bit of a scam, I think.
Speaker 3Uh, why financial planning is different for pilots. That's partially why we do some of these episodes every now and then. Is is uh, we think differently and um, uh, we have very different benefits. Uh, most common thing I get through, my team tells me as pilots go through the planning process is yeah, they, they decided to work with this firm before they learned about us. And they kept telling them no, no, no, you got that wrong. You don't get 18% into your 401k plan. You need to go back to HR and ask them what your match is Actually. You do, uh, need to go back to HR and ask them what your match is Actually. You do, cause there used to be a pension and the pension went away and so unions negotiated and now there's 18% of what you make goes into your 401k plan. But people in the regular world just don't understand that.
Speaker 1Right, right. That's a very different concept than most.
Speaker 3Well, evan, thank you for doing this, thank you for keeping it safe professionally as your career, but also to general aviation as well.
Speaker 1It's my pleasure. Thanks for having me back, great help for me and thanks for all the good advice you've given me and my family. Maybe it's a trade. Absolutely Sounds like a good trade to me.
Speaker 3All right, thanks for listening, guys. We'll see you next time.
Speaker 4Thanks for listening to a Wiser Retirement Podcast. We hope you enjoyed today's episode. Make sure to subscribe wherever you're listening. That way you don't miss any new episodes. We'd also appreciate if you could leave a rating and review.
Speaker 4If you have any questions about anything that was discussed today, head to wiserinvestorcom and reach out. This podcast is strictly for informational purposes only and is not to be considered as investment advice or solicitation to buy or sell any financial products, securities, digital assets or any other investment vehicles or a basis to make any financial decisions. Wiser Wealth Management Incorporated is a registered investor advisor with the SEC. The host and or guests may personally own securities, digital assets or other investment vehicles mentioned on this podcast. Neither the host nor guests of the show are compensated for their participation and no referral fees are paid to or received by any host or guest for clients, listeners or similar interests. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor, tax professional, insurance professional and or legal professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.